2008 (7) TMI 348 - AT - Service Tax

Delay in payment of tax appellant submits that the service tax along with interest has been paid before the issue of SCN - Even on merits, they contest the case and are seeking deduction of various amounts - appellant prays for waiver of pre-deposit of the penalty amount as there was no suppression of facts in the matter - assessee is raising several pleas pertaining to non-imposition of penalty - prayer accepted - stay application is allowed

Summary

Issues:
1. Pre-deposit of penalty amount under Section 78 of the Finance Act.
2. Contesting the case on merits and seeking deduction of various amounts.
3. Imposition of penalty for non-depositing service tax.
4. Financial hardship as a ground for not depositing service tax.
5. Prayer for waiver of pre-deposit of penalty amount.

Analysis:
1. The appellant was required to pre-deposit a penalty amount of Rs. 6,43,420/- under Section 78 of the Finance Act, in addition to a penalty of Rs. 1,000/- under Section 77. The appellant argued that the service tax with interest had been paid before the issuance of the show cause notice, requesting a waiver of pre-deposit. The appellant also contested the case on merits, seeking deductions not granted. The Bench accepted the plea for waiver of pre-deposit of the penalty amount due to the timely payment of service tax and interest.

2. The learned SDR reiterated that the assessee had collected service tax but failed to deposit it, providing grounds for imposing the penalty. The SDR argued against granting waiver, stating that financial hardship for non-depositing service tax within the stipulated time was not a valid reason. The Tribunal observed the various pleas raised by the assessee regarding non-imposition of penalty and noted the timely payment of service tax and interest before the show cause notice. Consequently, the Tribunal accepted the prayer for waiver of pre-deposit of the penalty amount.

3. After considering the submissions from both parties, the Tribunal acknowledged the appellant's compliance with payment before the issuance of the show cause notice. Therefore, the Tribunal granted the waiver of pre-deposit of the penalty amount and allowed the stay application. The Tribunal ordered no recovery of the amount even after 180 days from the date of the order, scheduling the appeal for a hearing in due course. The decision was pronounced and dictated in the open court by the Tribunal members.

This detailed analysis covers the issues of pre-deposit of penalty, contesting the case on merits, imposition of penalty for non-depositing service tax, consideration of financial hardship, and the prayer for waiver of pre-deposit of the penalty amount as addressed in the legal judgment delivered by the Appellate Tribunal CESTAT Bangalore.